Five Merits of Sustainability Reporting for Management

July 7, 2011
Authors
  • David Korngold portrait

    David Korngold

    Managing Director of BSR Innovation Group, BSR

Some think of sustainability reporting as a tack-on to a company’s strategy—that it’s all a bunch of granola that doesn’t matter to meat-and-potatoes management decisions. Yet sustainability reporting offers a tremendous opportunity to generate and communicate management insight, develop a more robust organization, and drive value for the company. This is all in addition to the potential environmental and social benefits that can result from developing a sustainability strategy and report.

I recently attended a certified training on the Global Reporting Initiative (GRI), conducted by the ISOS Group, which got me thinking about the many merits of sustainability reporting. These five illustrate the powerful management opportunity in sustainability reporting.

  1. Sustainability reporting is about process, not just product. The process of developing a sustainability report involves strategic thinking about how sustainability issues affect a company, as well as how a company affects sustainability. This also involves gathering input from internal and external stakeholders. For management, the exercise can generate a stronger organization and insights into strengths, weaknesses, risks, and opportunities.
  2. It’s a unique opportunity to spotlight a company’s management values, strategies, and acumen. Amid financial reporting strictures and media mayhem, it can be difficult for a company to tell its own story. Management can use sustainability reporting to elucidate its strategic approach, internally and externally. Reporting is also a platform to showcase long-term thinking.
  3. It develops critical linkages across functions, geographies, and business units. In increasingly complex and siloed organizations, the sustainability reporting team might be the only group that engages all aspects of the business. This generates powerful opportunities for internal communication, developing corporate culture, and sharing best practices.
  4. Sustainability reporting is there for you through thick and thin. When a company is under pressure, a candid sustainability report can help engage critics, respond to crises, and communicate values. In steadier times, sustainability reporting can proactively engage stakeholders, identify risks and opportunities, and create shareholder value.
  5. Sustainability reporting allows for vulnerability—and that’s okay. Companies rarely communicate problems; they communicate solutions. Yet in sustainability reporting, admitting uncertainties and works in progress is okay. Even an excellent sustainability report might acknowledge, “We don’t track those data yet, but we’re looking into it,” or, “We’re not sure, but we’re partnering with NGOs to figure it out.” Even without all the answers, there is inherent value in transparency and the reporting process.

While there are myriad benefits to sustainability reporting, these five illustrate some of the potential value to management teams, directors, and shareholders. Ultimately, the c-suite might discover that sustainability reporting is an important part of a balanced meat-and-potatoes management diet.

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